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American Airlines wants to share a portion of Boeing 737 Max compensation to its employees

American Airlines is planning to share a part of the compensation it will get from Boeing for around 10-month grounding of the 737 Max to its employees. The said disruption of the aircraft has cost the carriers more than $1 billion in revenue.

American Airlines talks with Boeing is still not yet done and on-going. Other 737 Max customers like Icelandair, Southwest Airlines, and Turkish Airlines have already reached an agreement with the well-known manufacturer but the final cost, whether in cash compensation or discounts on several aircraft is not yet clear since the grounding as well is on-going.

The grounding of the 737 Max, one of the best-selling aircraft, happened due to the two crashes, one in Indonesia in October 2018 and the other one in Ethiopia in March. The said events prompt the manufacturer to suspend its production and even cost the former CEO Dennis Muilenburg his job. Also, it forced various airline companies to cancel thousands of flights which in return curb growth plans. Meaning to say, less overtime for employees.

As per the recent statement released by the Federal Aviation Administration, until now, they can’t give a set of a timeline for clearing the planes to fly again. They need to individually review the 737 Max before they can be used in the operations again.

That decisions and uncertainties have forced several airline companies who make use of the said aircraft to repeatedly remove the jetliners from their schedule. That event becomes more disruptive since various airline companies expected to have several more 737 Max aircraft delivered since the said grounding. As for American Airlines, they currently have 24 737 Max aircraft in its fleet before the grounding and also expected the size to be doubled this year.

Ross Frinstein, the American Airlines Spokesman said that the company expects that they will be compensated for the loss of earnings due to the grounding of Max. American Airlines also anticipates that the part of any compensation that they will receive will be eligible for-profit sharing to its employees. Besides, the company took around $4.9 billion after-tax charges in the 2nd quarter just to compensate airlines for the grounding.

American Airlines foresee that they Max grounding would cost $540 million in pretax income in 2019 though the full financial toll on airlines cannot be identified yet since it’s not clear when the aircraft will be allowed to fly again.